Yemen inflation hits 14-mth high of 14 pct in April

Reuters Staff

3 Min Read

* Rise fuelled by food, tobacco and qat

* Nominal GDP up 4.8 pct in 2012

* Current account gap widens to 3 pct/GDP in 2012

DUBAI, June 11 (Reuters) - Annual inflation in Yemen surged to 14 percent in April, the highest level since February 2012, fuelled by rises in the prices of food, tobacco and qat, central bank data showed on Tuesday.

Inflation had fallen from a peak of 25 percent in October 2011 to as low as 5.5 percent last November as political unrest eased, helping the economy recover. But it has picked up again in recent months, hitting 13.1 percent in March.

Food inflation in the poor Arabian Peninsula state climbed to 16.3 percent year-on-year in April from 15.8 percent in March. Annual price growth of tobacco, cigarettes and qat, a mild stimulant leaf that many of Yemen's 25 million people chew daily, jumped to 26.6 percent from 21.6 percent.

The central bank cut interest rates by 5 percentage points between last October and February to support an economic recovery. Its head said in April that he was comfortable with the current level of rates - a three-year low of 15 percent.

The International Monetary Fund forecast in April that Yemen's inflation would average 7.5 percent in 2013, down from 10.2 percent in 2012.

The country's current account deficit widened to $985.6 million last year from $527.4 million in 2011, as crude oil exports fell to their lowest level since 2009, while imports were the highest since at least 2005, the data showed.

The 2012 current account gap accounted for 3.0 percent of GDP, up from 1.7 percent in 2011, the central bank said.

Imports jumped to $11.4 billion from $8.5 billion in 2011, pushing the trade balance into a deficit of $3.8 billion, the biggest deficit since at least 2005. The country booked a trade surplus of $574.2 million in 2011.

Yemen, the second poorest Arab state after Mauritania, attracted $1.8 billion in foreign direct investment last year, up from $1.5 billion in 2011, the data showed.